Markets treading water ahead of US earnings, economic data & ASX AGMs

 

The major averages ticked higher in afternoon trading Friday to end the day on an upbeat note as investors assessed tougher language from Federal Reserve speakers and poured over the latest earnings reports.

There will be more focus on central banks and interest rates this week as investors continue to wonder when the stuttering rally will finally die out.

Big investors are not convinced on the sustainability of the weak rally, Twitter’s stumbling progress towards possible collapse is starting to worry markets, the FTX debacle and other losses in crypto are raising questions about some investment firms and a couple of key commodities took a hit on Thursday and Friday.

At the same time the early results from the monthly surveys of business conditions will be out Wednesday and will provide an update as to the health of activity in economies in Asia, the US and Europe.

There’s a few quarterly results to be released – quite a few annual meetings in Australia – and at the end of the week America will close for the annual Thanksgiving break on Thursday and then the start of the Black Friday sales season, leading up to Christmas.

Over the weekend the Dow rose 199.37 points, or 0.59 per cent, to 33,745.69 on Friday, the S&P 500 climbed 0.48 per centto 3,965.34 and the Nasdaq finished flat.

And for those of you who have watched ‘The Dropout’- Theranos founder Elizabeth Holmes – once hailed as the next Steve Jobs – was sentenced to 11 years in prison for defrauding investors in what would have been the biggest tech scandal news of the week if FTX had never existed.

On the white-collar prison time scale ranging from Martha Stewart’s five months to Bernie Madoff’s 150 years, Holmes’s sentence for what the judge estimated to be $121 million worth of scamming is probably starting to make Sam Bankman-Fried a little nervous about that disappearing $32 billion.

And the collapse of FTX has highlighted how deeply intertwined Crypto companies are — they invest in one another, buy one another’s tokens and lend tokens and capital to one another — which means the collapse of FTX could continue to topple others; because FTX is not your average failed company. John Ray, who handled Enron’s bankruptcy and was named chief executive of FTX when it filed for Chapter 11 protection, told the Bankruptcy Court that he had never seen a situation as chaotic as what he was running into at FTX. Stay tuned this story has a long way to go.

Across the sectors, no real leadership with energy following the fall in oil – with best performing industries including cyber security, online education, pharmaceuticals & solid state batteries.

Best performing stocks included Cisco, Merk, Walmart & American Express.

Oil prices fell over 10% last week reacting to the latest forecasts of OPEC, which cut its oil demand forecasts once again due to the slow reopening of China, still being strangled by its zero-Covid policy. There have been more than 20,000 cases a day across China for the past six days.

Opec’s lowered demand forecast suggested a bleak picture of the global economy in2023 which weighed on investor sentiment.

Currencies

One Australian dollar at 7:20 AM has weakened compared to the US dollar on Friday buying 66.69 US cents (Fri: 66.95 US cents).

Commodities

Iron ore futures are pointing to a 0.5 per cent gain.

Gold lost 0.5 per cent. Silver gained 0.2 per cent. Copper dropped 1.4 per cent and oil lost 1.9 per cent.

Futures

The SPI futures are pointing to a 0.3 per cent gain.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris added over 1 per cent, Frankfurt gained 1.2 per cent and London’s FTSE closed 0.5 per cent higher.

In Asian markets, Tokyo’s Nikkei fell 0.1 per cent, Hong Kong’s Hang Seng lost 0.3 per cent and China’s Shanghai Composite closed 0.6 per cent lower.

On Friday, the Australian sharemarket added 0.2 per cent to close at 7152.

Ex-dividends

Elders (ASX:ELD) is paying 28 cents 30 per cent franked
Kelly Partners Group (ASX:KPG) is paying 0.3993 cents fully franked

Dividends payable

Reckon (ASX:RKN)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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